AIM-listed diamond exploration company Botswana Diamonds is advancing towards diamond production at the Thorny River project in South Africa.
South Africa – Botswana Diamonds has concluded a mining contract with Palaeo Minerals covering both bulk sampling activities and potentially future full-scale mining services at the Thorny River project.
Following the release of a technical and economic evaluation report on Thorny River in June 2018, Botswana Diamonds and its partner Vutomi have been considering a number of options to advance the property, concluding with the company signing the contract with Palaeo – who is an experienced mining contractor with several mining contracts in South Africa and Zimbabwe.
The contract will enable Botswana Diamonds to self-fund the Thorny River project from bulk sampling through to mine development, assuming positive results.
“We are confident that Thorny River could be the first diamond producing project for Botswana Diamonds. A royalty bulk sampling/mining model means that we have no capital expenditure apart from a limited in-fill drilling programme in early-2019,” says Botswana Diamonds chairman John Teeling.
The key terms of the contract are as follows:
- A net revenue royalty of 12% will accrue to Vutomi;
- 8% will accrue to Vutomi to cover state mineral royalties, sales and security expenses;
- 80% will accrue to Palaeo to cover its mining and processing costs;
- A processing target of up to 30 000 tof kimberlite per month; and
Diamonds will be recovered using a processing facility at a nearby diamond mine.
Modelled diamond grades and value ranges were reported in February 2018 (46-74 cpht and US$120- US$220 per carat respectively over the estimated volume of 1.2 to 2.1 Mt of kimberlite to a depth of 100 m). Assuming optimum kimberlite processing, the annual benefits of the contract over the 3 to 6 year mine life of Thorny River could potentially be between US$2 to US$7 million annually.
Regulatory approvals from the South African Department of Mineral Resources have been applied for.
An advance in-fill drilling programme will allow detailed planning prior to commencing bulk sampling and the revenue and information from this project will enable the company to consider further long-term options for Thorny River and the surrounding kimberlite field.
“We anticipate the award of the necessary regulatory approvals in anticipation of revenue being generated during the course of 2019,” says Teeling.